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Government Accountability Office Focuses on Nursing Home Abuse Reporting

By Susan V. Kayser

On July 23, 2019, the U.S. Senate Finance Committee held a hearing where a representative of the Government Accountability Office testified on elder abuse in nursing homes.  At the hearing, reported at GAO-19-671T, the GAO representative discussed the June 2019 GAO report entitled “Improved Oversight Needed to Better Protect Residents from Abuse” (GAO-19-433).

The GAO analysis of CMS data found that, while relatively rare, abuse deficiencies cited in nursing homes more than doubled, increasing from 430 in 2013 to 875 in 2017, with the largest increase in severe cases. In light of the increased number and severity of abuse deficiencies, GAO testified that, while it is imperative that CMS have strong nursing home oversight in place to protect residents from abuse, there are several oversight gaps that may limit the agency’s ability to do so.  The gaps include:

  1. Information on abuse and perpetrator type is not readily available. CMS does not require state survey agencies to record the type of abuse and perpetrator and, when this information is recorded, it cannot be easily analyzed. Without this information, CMS lacks key information and, therefore, cannot take actions—such as tailoring prevention and investigation activities—to address the most prevalent types of abuse or perpetrators.
  2. Facility-reported incidents lack key information. CMS has not issued guidance on what nursing homes should include when they self-report abuse incidents to state survey agencies. This contributes to delays in state agency investigations and the inability to prioritize investigations for quick response.
  3. Gaps in CMS processes can result in delayed referrals to law enforcement. CMS requires a state survey agency to make a referral to law enforcement only after abuse is substantiated—a process that can often take weeks or months. As a result, law enforcement investigations can be significantly delayed. GAO reported that delay in receiving referrals limits law enforcement’s ability to collect evidence and prosecute cases—for example, bedding associated with potential sexual abuse may have been washed, and a victim’s wounds may have healed.

The report on which the GAO testimony was based made several recommendations, including that CMS:

  • require state survey agencies to submit data on abuse and perpetrator type;
  • develop guidance on what abuse information nursing homes should self-report; and
  • require state survey agencies to immediately refer to law enforcement any suspicion of a crime.

GAO reported that the Department of Health and Human Services concurred with GAO recommendations.

Some in the health care provider sector have raised concern about confusing definitions of the term “abuse,” pointing out that the CMS definition that applies to various types of providers differs from the definition in the Elder Justice Act of 2010, which requires nursing home reporting of certain types of incidents.  As a result, while a nursing home would be obliged to report an incident under the Elder Justice Act, another type of health care provider may not be mandated to do so.

In fall 2019 another GAO report concerning abuse matters is due to be published.  It is expected to compare federal abuse reporting requirements for nursing homes and assisted living residences.

Of course, it remains to be seen whether Congress or CMS will act soon to address issues raised by GAO.

A Call for Healthcare Boards to Evaluate Conflict of Interest

In The Wharton Healthcare Quarterly, Duane Morris partner Delphine O’Rourke writes:

The high profile conflict of interest (COI) scandal at the Memorial Sloan Kettering (MSK) Cancer Center is a call to action for healthcare boards and their members to evaluate their organizations’ conflict of interest oversight. The scandal has become synonymous with egregious and ethically troubling relationships between non-profit health systems and pharma companies – even at the highest levels of one of the most prestigious healthcare institutions in the world. Almost nine months after the significant and publically scrutinized COI lapse, the preeminent New York research hospital and institution is still trying to recover from the reputational, leadership, and governance damage.

Visit the Duane Morris LLP website to read more.

Effort to Legalize Adult Use of Marijuana Fails in New York State

By Jerome T. Levy and Lauren G. Perry

Lauren G. Perry
Lauren G. Perry
Jerome T. Levy

On June 17, 2019, the New York Legislative session adjourned without passing a bill that would have legalized adult use cannabis in the state.  The sponsor of the leading bill in the assembly and Manhattan Democratic Senator, Liz Krueger, announced that there was not sufficient time to gain the support necessary for passage of a bill.  Although there appears to be broad popular support for legalization of marijuana in New York, a number of “safety” issues arose, particularly among suburban constituencies relating to concerns such as operation of motor vehicles under the influence of marijuana.  Sentiment in suburban areas caused lawmakers from those districts to withhold the support needed, particularly in the state senate.  In addition, many blamed the failure on Governor’s Cuomo’s reluctance to give the measure full support.  Although the governor had endorsed adult use legalization earlier in the session, and had attempted to include it within the budget bill passed at the end of March, at the critical time before adjournment he appeared to take a hands‑off approach, becoming oddly passive, a pose this activist governor rarely adopts. Continue reading Effort to Legalize Adult Use of Marijuana Fails in New York State

May Health Plan Administrators Recoup Overpayments From Providers Through Cross-Plan Offsetting? One Federal Appeals Court Is Skeptical.

By Christopher Crosswhite

Health insurance conglomerates like UnitedHealth Group, Aetna, and Anthem administer benefits and process medical claims for thousands of employee health insurance plans that are governed by the Employee Retirement Income Security Act (“ERISA”).  Similarly, most health care providers furnish services to beneficiaries of numerous health insurance plans, meaning that the providers’ claims for payment are frequently processed and paid by companies like UnitedHealth, Aetna, or Anthem, acting as administrators for these plans.  Beginning in 2007, UnitedHealth began a practice known as “cross-plan offsetting” in order to more easily recoup overpayments it had made to providers that were not in the health plans’ networks.  Under cross-plan offsetting, an administrator for multiple health plans offsets overpayments made to an out-of-network provider under one health plan against the payments owed to that same provider under other health plans of that administrator.  Cross-plan offsetting arises more often in the case of overpayments to out-of-network providers because health plans’ contracts with in-network providers usually permit recoupment of overpayments by withholding payment for subsequent services furnished by the in-network provider, and the in-network provider will generally furnish services to a plan’s beneficiaries much more often than an out-of-network provider will.

Some out-of-network providers have brought class actions on behalf of health plan beneficiaries challenging the legality of cross-plan offsetting.  In a decision issued on January 15, 2019, the U.S. Court of Appeals for the Eighth Circuit ruled against UnitedHealth’s practice of cross-plan offsetting, finding that cross-plan offsetting was not authorized by the documents of the health plans in question.  Peterson v. UnitedHealth Group, Inc., 2019 U.S. App. LEXIS 1270 (8th Cir.2019).  Before addressing the merits of the challenge to cross-plan offsetting, however, the Eighth Circuit first addressed whether Dr. Peterson, the out-of-network provider bringing the class action on behalf of his patients, had standing as the representative of his patients to bring an action under ERISA.  Health care providers generally do not have standing to bring an action under ERISA on their own behalf to recover benefits due under a health plan; instead, they must bring such an action under an assignment from the plan’s beneficiaries or as their representative.  UnitedHealth contended that Dr. Peterson could not act as his patients’ representative because he had not adequately disclosed a conflict of interest relating to balance billing for out-of-network services.  In rejecting this argument, the court found that having UnitedHealth pay for Dr. Peterson’s services “with money rather than with an offset” would be in both Dr. Peterson’s interest and the patients’ interest if the offset was not a valid payment of their obligation for the services.  2019 U.S. App. LEXIS 1270, *10-11.  The court also found that the engagement letter signed by the patients adequately explained the potential conflict of interest.

The Eighth Circuit also rejected UnitedHealth’s interpretation of the plan documents as authorizing cross-plan offsetting.  While recognizing that the documents of the various plans granted UnitedHealth broad authority to interpret and administer the plans, the court concluded that the text of the plan documents provided no basis for authorizing cross-plan offsetting.  The court further observed tension between the practice of cross-plan offsetting and the requirements of ERISA:

While administrators like United may happen to be fiduciaries of multiple plans, nevertheless “each plan is a separate entity” and a fiduciary’s duties run separately to each plan.  Standard Ins. Co. v. Saklad, 127 F.3d 1179, 1181 (9th Cir. 1997).  Cross-plan offsetting is in tension with this fiduciary duty because it arguably amounts to failing to pay a benefit owed to a beneficiary under one plan in order to recover money for the benefit of another plan.  While this benefits the later plan, it may not benefit the former.  It also may constitute a transfer of money from one plan to another in violation of ERISA’s “exclusive purpose” requirement.  29 U.S.C. § 1104(a)(1).

2018 U.S. App. LEXIS 1270, *14-15.  Although the Eighth Circuit did not specifically rule that cross-plan offsetting violated ERISA, it expressed skepticism regarding interpretations of plan documents “that authorize practices that push the boundaries of what ERISA permits.”  2018 U.S. App. LEXIS 1270, *15.  This skepticism led the court to conclude that UnitedHealth’s interpretation of the plan documents was not reasonable and to uphold the district court’s grant of partial summary judgment in favor of the class action plaintiffs.

Christopher Crosswhite is a partner at Duane Morris’ Washington D.C. office who practices in the area of healthcare law.

Non-Competition Clauses – Make No Assumptions

By Patricia S. Hofstra

The enforceability of non-competition clauses depends on a number of factors. Non-competition clauses are viewed in the context of anti-trust laws as a restraint of trade and disfavored.  Consequently, the entity seeking to enforce a non-compete must be able to prove a legitimate business reason for the non-compete. A number of states flat out prohibit non-competition agreements, while other states enforce non-competition agreements on a case by case basis. In some states where non-compete provisions that restrict the physician’s right to practice medicine are considered void and not enforceable as a matter of law, employers may be able to sue the departing physician for monetary damages suffered because of the competition. Continue reading Non-Competition Clauses – Make No Assumptions

SUPPORT Act Expands Sunshine Act Disclosure Requirements, Covered Recipients

On October 24, 2018, President Donald Trump signed the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act (SUPPORT Act), a combination of a number of previously passed House and Senate bills related to addressing the opioid crisis. One of the provisions of this lengthy bipartisan package of bills includes an expansion of the disclosure requirements initially imposed by the Physician Payments Sunshine Act.

Read the full text of this Alert on the Duane Morris LLP website.

Physician Compensation

By Patricia S. Hofstra

Today’s blog addresses compensation and benefits; a complicated subject of upmost interest to our clients. The blog touches on major points to consider regarding compensation and benefits. Physicians and physician groups must consult with compensation experts and legal counsel to insure that they understand the best possible, regulatory compliant compensation model for their needs. There are pros and cons and multiple variations of each model.  Continue reading Physician Compensation

Contractual Indemnification – DANGER

By Patricia S. Hofstra

Indemnity provisions are used to shift risk from one party to another. The intent of an indemnification provision in an agreement is to impose on one party the responsibility to pay the liability, damages, costs, expenses, and attorney fees for the other party to the agreement, under the circumstances set forth in the agreement.  An indemnification clause obligates one party to compensate the other party for losses or damages. This compensation is separate and apart from other contractual obligations and damages.  Continue reading Contractual Indemnification – DANGER

Settlement of the Osteopathic Physicians Class Action Against the American Osteopathic Association

Duane Morris is very pleased to announce the settlement of the Osteopathic Physicians Class Action against the American Osteopathic Association, Talone, et. al v. American Osteopathic Association.  The Court has granted preliminary approval of the settlement, and members of the class and sub-classes will be receiving notice of the settlement in the coming weeks.

The settlement is a resolution of the claims the class representatives asserted against the AOA that was negotiated over a period of approximately four months, and that provides a range of benefits to tens of thousands of DOs.  Those benefits are estimated in value to be worth significantly more than $35,000,000.

Please see our announcement for more information.

 

CMS Retreats on Jurisdiction for Medicare Provider Reimbursement Appeals of Self-Disallowed Items, But How Far?

By Christopher L. Crosswhite

On April 23, 2018, the Administrator of the Centers for Medicare and Medicaid Services (“CMS”) adopted a new ruling conceding the jurisdiction of the Provider Reimbursement Review Board (“PRRB”) in certain circumstances over costs or items “self-disallowed” by the provider. In Ruling No. CMS-1727-R (the “Ruling”), the Administrator announced that the PRRB has jurisdiction over a provider’s appeal regarding Medicare payment for an item that the provider did not include in its cost report when the following circumstances exist:

  1. The appeal is pending on or after April 23, 2018, or was initiated on or after that date; and
  2. The cost reporting period under appeal ended on or after December 31, 2008, and began before January 1, 2016; and
  3. The provider had a good faith belief that the item was not allowable under Medicare regulations or payment policy.

This Ruling represents a retreat from regulations adopted in 2008, which required that in order to appeal an item to the PRRB, a provider must either claim Medicare payment for the item in its cost report or include the item as a protested amount in the cost report. CMS took the position that a provider could not be “dissatisfied” with the Medicare contractor’s determination of Medicare reimbursement, as required by the statute for a PRRB appeal, if the contractor made no determination on the item because it was not included in the cost report, even if reimbursement was prohibited under Medicare policy. The Ruling indicates that CMS is retreating from this position because of the 2016 decision of the U.S. District Court for the District of Columbia in Banner Heart Hospital v. Burwell, which held that the PRRB had jurisdiction over the hospitals’ challenge to Medicare outlier payment regulations despite the hospitals’ failure to claim protested amounts related to their challenge. The district court found that a cost report claim for additional outlier payments would have been futile because the Medicare contractor had no authority or discretion under the outlier payment regulations to make payment as sought by the hospitals. The Ruling states that CMS has decided to apply the holding in Banner Heart in similar administrative appeals.

The Ruling does not entirely do away with the requirement of including an item in the cost report in order to pursue Medicare reimbursement for it in a subsequent appeal. First, the Ruling applies only if the cost reporting period under appeal began before January 1, 2016. This end date is not coincidental—for periods beginning on or after January 1, 2016, CMS has simply shifted the requirement that an item be included in the cost report from being a prerequisite for PRRB jurisdiction to being a so-called “general substantive requirement” for Medicare payment. Second, the Ruling applies only where the provider had a good faith belief that the item was not allowable. The Ruling indicates that “a provider would rarely be able to demonstrate a good faith belief that an item is not allowable when that item is actually allowable under a Medicare payment regulation or other policy.”

Unfortunately, the Ruling may muddy the waters regarding the use of protested amounts in the Medicare cost report. The Ruling acknowledges that providers sometimes claim items through protested amounts “out of concern that a cost report claim for reimbursement of an item deemed non-allowable might raise program integrity questions.” Notwithstanding the Ruling, “a provider still may elect to self-disallow a specific item deemed non-allowable by filing the pertinent parts of its cost report under protest.” But the Ruling then states as follows:

“However, if the PRRB… were to determine that, despite the provider’s self-disallowance of the specific item under appeal, the Medicare contractor actually had the authority or discretion to make payment for the specific item at issue in the manner sought by the provider on appeal and the provider did not demonstrate a good faith belief that such item is not allowable, then the [PRRB] shall apply the Third implementation step for this Ruling.”

Under the third implementation step, the provider’s appeal of the item is to be dismissed for failure to meet the “dissatisfaction” requirement for jurisdiction. One problem with this statement is that providers sometimes claim items as protested amounts where the Medicare contractor has disallowed the item in previous cost report audits for lack of sufficient documentation. The adequacy of documentation to support reimbursement is one area where the Medicare contractor would seem to have discretion to allow payment. Why would CMS want to discourage providers from taking a cautious approach in claiming items in the cost report that have been disallowed in previous audits?

Christopher L. Crosswhite practices in the area of healthcare law, concentrating on Medicare and Medicaid law and regulations, Medicare reimbursement controversies and appeals, and healthcare fraud and abuse provisions.